The Kinect is arguably Microsoft’s most important innovation of the past decade, and has done more for changing the nature of computer interaction than pretty much any other recently created input devices. Today, Microsoft Research has demoed how it’s about to get even better, with the addition of hand recognition complete with refined gesture support.

Microsoft is showing off the new features at its TechFest even this week at Redmond HQ, and The Verge has a video of the new capabilities in action. As you can see from the video, you can use pinch-to-zoom, as well as hand gripping motions that allow for panning and scrolling too. The technique employs machine learning to recognize the difference between an open and closed hand, which is then integrated into Windows games and apps.

The video shows navigating maps, as well as playing Jetpack Joyride in Windows 8, and shows how a simple close finger gesture can be recognized as a mouse click essentially, which would be a very handy tool to add to Kinect’s Windows-based powers. The upgraded features are destined for Windows soon (though no specific timeline was given), though sadly there’s nothing to announce yet for bringing the enhanced gesture detection powers to Xbox.

The Kinect will soon have its own fair share of competitors when it comes to gesture-based input for desktop computing. The Leap Motion Controller ships May 13 to pre-order customers, and promises to deliver extremely fine gesture detection on both Windows and OS X, to the point where it should work for virtual painting and drawing applications, with a module much smaller and without the same physical space requirements as the Kinect. The MYO armband from Thalmic labs is also attracting a lot of early attention for its own, body sensor-based gesture control powers.

Microsoft did some terrific ground breaking in this space, but now the company has keep pace with a number of hungry young startups eager to blow it wide open. These new feature additions for Kinect for Windows should help Microsoft keep the competition interesting.